제 10 호 Why Luxury?
Kicker: LIFE (LUXURY CONSUMPTION)
Why Luxury?
Luxury Consumption of the MZ Generation
By Sol-Hyang Park, Reporter
CELINE, DIOR, BVLGARI, GIVENCHY & GUCCI, BALENCIAGA, SAINT LAURENT!
You must have heard of those luxury brands. Each group of brands are affiliated with the fashion group company, LVMH & Kering. Stock price of the two companies continued to curve upward in the Covid-19 rebound. As the saying, “There is no recession in luxury goods,” shows, consumption of luxury items is steadily increasing despite the continuation of Covid-19. Who, why, is buying luxury goods?
Soaring Popularity of Luxury Goods
From the start of the Corona Pandemic, the fashion industry has been hit hard. According to the MTI(Ministry of Trade and Industry), the total sales of the main three department stores (Lotte, Shinsegae and Hyundai) fell more than 10% last year from the previous year, as people do not go out and buy new clothes in the recession. Despite this situation, however, the total sales of luxury brands of the department stores in 2020 increased by 15.1%, and also, this year's total sales of the 1st quarter increased by 21% compared to that of last year. Furthermore, there is still an open-run chaos in front of the department store's luxury hall, where people line up for a long time before opening.
Revenge Spending
The first thing many experts say about why they are so enthusiastic about luxury goods is revenge spending, in which suppressed consumption desires are vented. They say that many people are tired of staying at home due to the prolonged Covid-19, so they purchase luxury goods for refreshing. It seems that people have spare money saving on dining out, overseas travel, and leisure expenses semi-mandatory, then spend money on luxury goods.
Furthermore, compared to last year, people who were limited in activity are slowly going out and buying things as they get used to the pandemic and become numb to the Covid infection. In doing so, not only online but also offline consumption of luxury goods is rising steeply.
MZ Generation
Who is the main consumer of such luxury goods? Luxury goods were exclusive to middle-aged people, but in the past 1-2 years. the main consumers of luxury goods is moving to 20-30s as the purchase of luxury goods in 20s has increased rapidly.According to Statistics Korea last year, the major department stores, Lotte and Shinsegae Department Store account for nearly 50% of luxury goods sales in their 20s and 30s. At this rate, it is said that 20-30s will soon surpass half of the total sales of luxury goods.
Experts say the young MZ generation soon surpass half of the total sales of luxury goods.
These consumers are called ‘MZ generation’, which includes Millennials and Generation Z, ranging from late teens to late 30s. They are familiar with the digital environment that uses SNS a lot and have a strong characteristic of pursuing unique experiences.
Flex Culture
Flex culture, a culture that shows off one's success or wealth, is a big part of their luxury consumption. Flex culture is a culture that shows off one's wealth to others by saving money diligently and purchasing luxury goods, where self-satisfaction and self-expression coexist. With the development of SNS, the desire to reveal oneself in SNS naturally leads to this Flex culture, and this showing-off culture is expanding into luxury shopping. The consumption desire suppressed by Covid-19, seems to be more prominent as it meets the flex culture.
In fact, we can easily see luxury related contents such as luxury shopping haul and luxury hashtags through social media such as YouTube and Instagram. The main consumers of this content is also the MZ generation, and they are used to purchasing luxury goods by obtaining luxury information and tips through SNS.
Increased Online Luxury Sales Platforms
The increase in online luxury sales platforms that allow non-face-to-face luxury shopping is also a major reason for the increase in luxury consumption. We used to buy luxury goods cheaply at local or airport duty-free shops while traveling, and also many luxury brands treat offline stores as their main distribution channel.
However, recently, we can buy diverse luxury goods online freely. Not only the brand’s online shopping mall, there are many luxury online shop where luxury brands are collected in one place such as Kakao Talk gift giving, Trenby, Luxury Gallery, and Dcode. The main consumers of these channels are, of course, the MZ generations who are familiar with online shopping and overseas direct purchasing.
Luxury Brands & Department Stores Aimed at the MZ Generation
Now the MZ generation is called the big hands in the luxury market, and many luxury brands are changing to reflect this. Targeting the MZ generation, they have begun to produce a collection of new, trendy and colorful attempts aimed at young people rather than sticking to the traditional classic designs. In addition, many luxury brands are selecting popular idols and actors as their ambassadors(models) for their brands to build a young image. Moreover, they also combine virtual reality such as hot games and avatars. For example, Gucci recently collaborated with Geppetto which is popular among the MZ generation. Above all, they work hard on SNS such as Instagram and YouTube, promoting all of these activities and communicating with the MZ generation.
Luxury brands trying to communicate with the MZ
Many department store companies are also introducing ‘2030’ memberships, strengthening their use of private cafes, birthday benefits, and luxury lineups to lower VIP entry barriers. "The Hyundai Seoul," which was opened at Hyundai Department Store recently, has also emerged as a hot place for the MZ generation, with hot restaurants and cafes gathered together, decorating lounge spaces with designs aimed at them.
As much data suggests, the consumption power of the MZ generation will gradually increase. This phenomenon is expected to be over a new culture, not a sparkling consumption due to Covid-19. However, some people take a critical view of the luxury consumption of the young. They say luxury consumption cannot be reasonable, and it is just unwise overspending. However, it is freedom of consumption to satisfy one's desires with the money one earns, so one has no right to say anything, whether or not the consumption is reasonable.
On the other hand, as they advise, it is recommended to control oneself from excessive luxury consumption beyond one's spending capacity. As the saying goes, “To go beyond is as wrong as to fall short.” Let’s spend happily in due degree so that you won’t regret in the future!
